By Gonzalo Brocos
Canada is a market with an increasing presence of Spanish fruit and vegetable exports, which have grown over the last five years by around 150%. The potential for Spanish exports to this country has been enhanced following the signing of the trade agreement between Canada and the European Union which was sealed in September 2017 and has succeeded in eliminating 91% of agricultural tariffs.
The excellent performance of fruit and vegetable sales from the EU to the North American country has led Fruit Attraction to choose Canada as one of the guest countries for the 2018 edition of the show.
As part of Fruit Attraction, to be held between 23 and 25 October at IFEMA (Madrid), a reverse trade mission is planned for Canadian distributors to foster commercial relationships with EU exporters. “This mission is an excellent opportunity to galvanise Spanish exports, which represent 67% of total European fruit and vegetable sales to Canada,” says José María Pozancos, General Manager of FEPEX, the body that is organising Fruit Attraction in conjunction with IFEMA.
The Spanish Federation of Associations of Producers and Exporters of Fruit and Vegetables (FEPEX) highlights a key factor in Canada’s buying profile. “This country shows a wide diversity in its purchases of fruit and vegetables which is quite ideal for flow of fruit and vegetable exports typical of Spain,” José María Pozancos points out.
The signing of the trade agreement between the EU and Canada boosts the attraction of this North American country, which effectively becomes an open market for Spanish exports, free from the tariff and phytosanitary barriers seen for other countries. “Canada has acknowledged that European production has the highest health and phytosanitary standards in the world,” says Pozancos.
The opening up of Canada contrasts with the protectionism maintained by its neighbour, the United States, where exporters come up against significant phytosanitary barriers. “It’s true that in the United States our main problem is phytosanitary barriers” acknowledges the chairman of FEPEX. “We have to negotiate protocols product by product and negotiations can drag on for between 2 and 5 years without any guarantee that the protocol will eventually be signed or that, once it is signed, the fluidity of operations will be maintained. Faced with this scenario, consolidating markets becomes more complicated,” he concludes.
Evolution of exports
Spanish exports to Canada have begun to increase gradually in recent years, with the real success story being the citrus market, which currently makes up two thirds of the volume of fruit and vegetables exported by Spain to the country.
Competitive prices and quality are the two factors that play an important role when it comes to gaining market share in Canada. The Spanish Institute for Foreign Trade (Icex), in its latest analysis of the Canadian market (2017), points out that Spanish citrus products have achieved “a reputation for high quality”.
Spain positioned its citrus products in the Canadian market – in the opinion of Icex – by taking advantage of the opportunity presented by periodic droughts suffered by the Californian and Texan harvests, traditional suppliers of the Canadian market. “Nevertheless, Canadian distributors are very flexible when it comes to supplying themselves with these products, so they often change their country of supply, motivated principally by price and the effects of weather. This makes it difficult to definitively consolidate the Spanish brand in fruit sales,” says Icex.
The Spanish Institute for Foreign Trade is convinced of the Canadian market’s appeal as, despite the fact that the country’s population is no more than 36.5 million, it is notable for its high per capita income and for the high segmentation seen in the fruit and vegetable market, with development in the gourmet range. “Growing interest can be detected amongst distributors and importers for Spanish products, and there is a certain fashion for Spanish gastronomy,” they say.
Interviews and visits to establishments undertaken by Icex’s trade office in Canada confirmed that Spanish produce is well known and highly valued in gourmet and specialist shops, but less noticeable and with a lower identity profile in mass distribution chains.
Icex also highlights a problem in consolidating the Spanish brand in that sometimes there is confusion with Latin American produce. The organisation thus recommends investment in promotional activity as a way of improving the brand image.
Spain has increased its volume of exports to Canada by 35% in 2017, according to Eurostat figures available to FEPEX. The most notable increases are in citrus sales, but also in other fruits, such as apricots, with 40% growth, and grapes, where sales have doubled. As for vegetables, brassicas (including cauliflowers and cabbages) saw a significant increase at almost triple the exports, as did onions.
Extenda’s activities in Canada
The attraction of the Canadian market led the Andalusian Export Trade Promotion Agency, Extenda, to undertake a direct trade mission in September 2017. This activity was attended by 11 companies from the Andalusian fruit and vegetable sector who set up relationships with potential buyers, or widened their contact portfolio in the case of businesses that already had a presence in the country.
Canada constitutes a priority market for Andalusian fruit and vegetable enterprises, to the point that in the second half of 2017 the North American country became the second biggest destination for Andalusian exports in the sector, behind only Brazil.
The activity, organised last September by Extenda, which has had an office in Canada since 2016, comprised a full agenda including three working days in Toronto and Montreal, with meetings with local distributors and importers, as well as a visit to the Ontario Food Terminal, the country’s main reference point in the buying and selling of fruit and vegetables.
The Ontario Food Terminal, known as the Fruit and Vegetable Market, is the third biggest distribution centre in the whole of North America and distributes over 900,000 tonnes of food per year. The market has 5,000 registered buyers and over 400 tenants.
The Andalusian Export Trade Promotion Agency – Extenda – which is attached to the Finance Ministry, reports that Canadian distributors prefer products that can be transported by ship, since movement by air considerably increases costs; and highlights the potential for products that cannot be found in Latin America or with complementary production seasons.
Andalusia is, after the Valencian Community, the region with the second highest exports to Canada, at 28% of the total Spanish fruit and vegetable sales to the country. The Andalusian companies that travelled to Canada to take part in last September’s trade mission are mainly based in Seville (Asocifruit, Berrydealer Consulting, Cintransat, Espalmex and Primor Fruit); and Almería (Biosabor, Fresh Sourcing, Unica Fresh and Zoi Agrícola); as well as Granada (Eurocastell) and Málaga (Sifrido Fruit).
Currently, Extenda has identified demand for produce such as citrus fruits, avocados and ecological fruit and vegetables. The agency notes that one of the country’s supermarket chains, Metro, is planning a significant change for 2018 to increase its supply of organic produce, so there are expected to be opportunities in this field.
As for supply routes, Extenda estimates that the present market is 50% direct supply and 50% through wholesalers and importers. The central purchasing departments of supermarkets prioritise direct supply, which favours those producers with the ability to move considerable volumes, although indirect supply continues to be important in the country.
The main players in Canadian distribution are the supermarket chains Loblaw, Sobeys, Walmart and Metro, with a total share of 68% (Source: Icex). In Quebec (east coast), the combined sales of the three major chains (Loblaw, Sobeys and Metro) make up almost two thirds of sales.
Ontario and Quebec, due to their geographical location and sales volumes, represent the most interesting markets for Spain, as they account for 60% of the population and 56% of sales, according to Icex figures.
Canadian agriculture is noted for large-scale production such as cereals and legumes. Its exports to the EU and Spain are dominated by produce like wheat, soya and lentils. In fruit, Canada is an important producer of blueberries, apples and grapes, though it is also a big importer of the latter. It also has a considerable production of vegetables in spring/summer, but the climate precludes production in autumn/winter. This is the period that offers the main window of opportunity for Spanish growers.
A report by the Murcia Development Institute in 2014 analysed all of Canada’s production sectors and the countries exporting to the country for each sector, with the aim of identifying the potential for Spanish fruit and vegetable producers. Its conclusion was that Spain had much potential in citrus fruits all year ’round – now realised in the latest campaigns – and that it could compete in many vegetable categories in the autumn/winter period and in produce with sufficient shelf-life to allow for oceanic transport.